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Fun For Profit: The World’s Nine Biggest Toy Companies

Companies
Fun For Profit: The World’s Nine Biggest Toy Companies

Toys are essential to a child’s development. They promote creativity and thinking, and encourage children to explore. Unfortunately, many of the world’s children do not have access to commercial toys, or cannot afford to buy toys, leaving toy manufacturers with a number of untapped markets. Yet the current focus of major toy companies is to continue to develop the dwindling North American audience. Last year’s total industry growth landed at about five percent. Hasbro recorded a decline in profit by about 11 percent in their last quarter, and Mattel’s revenue dropped 24 percent in 2013. There are some key theories as to why major toy companies have struggled: families are smaller, children are adopting technology sooner, and there are more distractions for children and the traditional figurine or play set is just not “entertaining” enough for today’s kids.

The end result for toy companies will depend on what new strategies will be implemented. Most of today’s toy companies are focusing their effort on building apps, video games, selling licences, and building interactive electronic toys. Market research has shown that children will spend more time on computers, mobile devices, and watching television or movies than they ever did before, which validates the focus and effort in this new direction.

But considering other markets might also be an effective strategy. The United States represents approximately 40 percent of the global toy market, and only has about two percent of the world’s children. For major toy companies, the international market consists of countries in Europe and parts of South America, with smaller markets in Australia and parts of Asia (mostly Japan).

Technology, global markets, and children have changed and will continue to change. Today’s biggest toy companies, who pay close attention to the aforementioned, will have their future success dictated by the strategies they implement today – the next few years will be key for today’s nine biggest toy companies.

A note: DCP (Disney Consumer Products) was left off this list. DCP records annual revenue of over $27 billion. Although DCP produces toys, a good portion of revenue is directly related to licensing brands to other toy companies.

9. Melissa & Doug – $325 Million Est. Annual Sales

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Melissa & Doug made this list for two reasons. The first is that they have had double digit growth year-over-year for the last two decades. The second is that most of the more recognizable toy companies are owned by Hasbro, leaving a large disparity between the top five and everyone else. Melissa & Doug are an American company, but manufacture their toys in China.

The company started in a basement in 1988 and since has produced high-end educational toys and puzzles. The company does not use electronic components, and instead focuses on traditional toy designs (blocks, wood, shapes, etc…). Melissa & Doug do not expect to change their direction and style anytime soon – leaving industry experts wondering how they will fare in this increasingly electronic age.

8. MEGA Bloks – $400 Million Est. Annual Sales

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Mega Bloks, part of the officially renamed MEGA Brands, is the name of the company’s flagship product – a line of construction toys. In 1967, Victor Bertrand and wife Rita Bertrand founded the company as Ritvik Toys, Inc. In 2002, the name was changed to MEGA Bloks, Inc, and in 2006, the company changed its name again as it acquired licenses and other toy brands that would quickly expand the toy line beyond blocks.

The company is best known for its large inter-locking colorful plastic block sets, but its recent expansion of products has allowed it to explore different products and even online games. MEGA Brands currently has the rights to make toys for brands that include Thomas the Tank Engine, Hello Kitty, Halo, Barbie, Hot Wheels, Skylanders Giants, World of Warcraft, and Call of Duty. Given its recent exploration into the tech-age, there’s no doubt MEGA Brands will continue to venture out into new landscapes.

7. LeapFrog – $580 Million Est. Annual Sales

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LeapFrog Enterprises is an educational toy and game company based out of California. The company is best known for its technology based learning products.  LeapFrog has been one of the leaders in introducing technology to children, offering specially designed tablets and digital reading pens.

The company was the first to re-vitalize learning concepts in mainstream toys, and uses a variety of generic characters that have now became house name brands. They also own licenses to build games using big name characters from Disney, Hello Kitty, and Sesame Street.

6. Jakks Pacific – $700 Million Est. Annual Sales

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Jakks Pacific, Inc. designs figurines, electronics, dolls, costumes, electric vehicles, stuffed dolls and animals, and kids’ art kits. JAKKS owns licenses to hundreds of recognizable trademarks including Disney, Warner Bros., Nickelodeon, Star Wars, Hello Kitty, UFC (Ultimate Fighting Championship), Graco, Cabbage Patch Kids, and formerly Pokémon and World Wrestling Entertainment (WWE).

The company was founded in 1995, and since then has acquired key brands, including Remco and Pet Pal Corp. The company’s real strength has been in negotiating licenses to brands, both obscure and mainstream. In the coming years, JAKKS is expected to continue to deliver a diverse product line and introduce more mainstream brands in their action figures and electronics.

5. Playmobil – $790 Million Est. Annual Sales

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Playmobil is a German company that produces a simple line of high-end toys. Its flagship products are 3-inch human figurines with a very traditional simple look with limited mobility. Most of their products are sold in sets, and come with a few characters, accessories, or even animals. Some of their sets are produced in limited quantities, which draw lots of interest from collectors.  This traditional toy set will continue to focus on collectors and consumers who want to pay a little more for “hard-to-find” toys.

4. MGA Entertainment – $2 Billion  Est. Annual Sales

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MGA Entertainment’s product line includes Lalaloopsy, Kachooz!, Moxie Girlz, Moxie Teenz, Hugwallas, Rescue Pets and Little Tikes. MGA is currently in legal dispute over their Bratz fashion doll, a toy they were accused of stealing from Mattel. MGA has built its reputation with figurines, which is why the acquisition of Little Tikes was critical in the expansion of its product line.

Little Tikes specializes in larger plastic toys, and its flagship products include molded plastic designs in kitchens and slides. In 2004, Little Tikes produced the Cozy Coupe toy car, which sold over six million units.

3. Hasbro – $4 Billion  Est. Annual Sales

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One of the largest toymakers in the world, Hasbro manufactures toy brands such as G.I. Joe, Littlest Pet Shop, Mr. Potato Head, Transformers, Marvel, and Pokémon. In addition to toys, Hasbro’s board game companies (Milton Bradley and Parker Brothers) also retail a long line of board games, including classics like Battleship, Clue, Monopoly, and Risk. Since the late 80s, Hasbro has acquired many medium-to-large sized toy companies such as Playskool, Tiger Electronics, Nerf, and Tonka. Hasbro’s Marvel, Transformers, and G.I. Joe figurines and games will continue to propel Hasbro into the next decade.

2. Lego – $4.5 Billion Est. Annual Sales

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The Lego Group is based out of Denmark. The company’s signature product, Lego, is one of the most recognizable toys in the world. Originally, Lego was a simply colourful interlocking set of plastic pieces. Today, the core of the product has not changed, but the design now includes themes from movies, television shows, and even video games.

Lego sets now include mini figurines, vehicles, and buildings. Lego has become more than just a brand over the last decade. Many video games that incorporate the Lego style have been released, and as of February 2014, Lego will be on the big screen with a Lego themed movie.

1. Mattel – $6.3 Billion Est. Annual Sales

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Mattel, Inc. was founded in 1945, and since then has produced brands such as Fisher-Price, Barbie, Monster High, Hot Wheels, Masters of the Universe, Little People, Power Wheels and WWE Toys. Despite Hasbro’s recent dominance in brand licensing, signing huge properties like Marvel, and owning the popular Transformers franchise, Mattel has maintained a steady lead.

Today, Mattel sits comfortably on top of the toy game, with over $6 billion in sales and licenses to produce toys for many hugely popular franchises, including Dora the Explorer, Sesame Street, and DC Universe.

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